Jarvis, William C. and Cindy Jarvis v. K&E RE One, LLC Stewart Title Company Bayview Loan Servicing, LLC , 2012 Tex. App. LEXIS 9927 ( 2012 )

AFFIRM.. Opinion issued November 30, 2012.
in l’lw
iL1aIrt tif 41pra1S
FiftIi Oitrirt nf Iix&u at Ja11a
No. 05-1 1-oo341-(:V
WI LLIAM C. JARVIS AND CINDY JARVLS, Appellants
V.
K&E RE ONE, LLC, STEWART TITLE COMPANY, ANI)
BAY VIEV LOAN SERVICING, Appellees
On Appeal from the I 62nd Judicial District Court
Dallas County, Texas
Trial Court Cause No. 10-00947-I
OPINION
Before Justices Moseley, Fillmore, and Myers
Opinion By Justice Fillmore
William C iarvis and Cindy Jarvis appeal (I) the trial court’s judgment granting K&E Re
.
One, LLC (K&E) declaratory and injunctive relief and awarding K&E attorney’s fees, and (2) the
trial court’s grant of summary judgment in favor of Stewart Title Company (Stewart Title) and
Bayvie\v Loan Servicing (Bayview). In four points of error, the Jarvises contend the trial court erred
by (I) denying their motion to exclude evidence, (2) finding North American Capital (NAC) had the
authority to act as agent for the Jarvises, (3) granting summary judgment in favor of Stewart Title
and F3ayview, and (4) awarding K&E attorney’s fees. We affirm the trial court’s judgment.
Factual Backtroiind
In the summer ol 2007, ( cna 1 uPon purchased a fourteenuuit apart mciii complex in Dallas.
Texas (the Property). I olton contacted NAt’ to obtain linancing l’or the purchase. NAC is in the
business ot tact1 itatinu shorttcrm real estate loans between private mortgage investors and real estate
purchasers tbr the acquisition and reliibi litation ol coiiiinercial al i’csidentiil prolert
As part ot its loan facilitation services, NAC is involved prior to a loan being funded in
performing due diligence as to the borrower and the property being purchased. After a loan closes,
NAC collects the monthly payments from the borrower and forwards the payments to the lender.
NAC keeps records ot any late payment and not ities the borrower of the necessity to pay a late fee.
NAC may also he involved in contacting counsel about foreclosing on a piece of property or about
representing the lender in a bankruptcy proceeding.
NAC contacted the Jarvises, and they agreed to provide the funding t’or the Lotion loan.
Loiton understood that NAC was operating servicer for the Jarvises. Lotton was not provided
with any contact inlormation for the Jarvises and had no direct contact with them during the loan
application process. In connection with closing the loan, Lofton signed a number of documents,
including a promissory note (the Note); a deed of trust (DOT); a business purpose affidavit; an
assignment of leases, deposits and rents (the Assignment); an environmental indemnification
statement; and a legal representation agreement. The Note, the business purpose affidavit, the legal
representation agreement, and the environmental indemnification agreement all reference NAC as
the “servicer.” The DOT names the Jarvises as the beneficiaries “c/o” NAC. The Assignment
identifies the lender as the .Jarvises 1
“c
o ” NAC. The settlement agreement signed at the time Lofton
purchased the Property indicates NAC received a loan origination fre and a processing fee. It also
shows that, after the closing, NAC held $28,100 of the loan proceeds in escrow and also held an
—2—
ad(htional S6.27.4 1 of the loan iceeds. Aecordinr to Lofton. the S2$. 100 held in escrow was for
construction work on the Property. l.otton could not recall why NA( held the remaining $6270.41
Lotion transfirred title to the Property to Capital Asset Solutions, LLC (CAS), an entity
controlled by Lotion. Pursuant to the terms of the Note, Lofton made payments every month to the
Jarvises at the oftices of NAC. The Note did not restrict the fbrm of payment, and Lotion did not
receive any instructions from either the Jarvises or NAC about the Ihrm of payment. Lotton made
the monthly payments by check written on the account of CAS.
In the spring of 200$, CAS agreed to sell the Property to K&E. Stewart Title was retained
to handle the closing. Adam Rachavong, a closing agent with Stewart Title, reviewed the DOT, the
Assignment, and the UCC financing statement filed by the Jarvises and saw no contact information
for the Jarvises. Because Lofton believed NAC was the servicer on the loan and it is customary for
the servicer to prepare a payoff request on a loan, she told Rachavong to contact NAC. According
to Rachavong, he “didn’t know for sure” if the “c/o” in the documents he reviewed gave NAC
authority to accept funds on behalf of the Jarvises. However, in Rachavong’s opinion, “do” meant
all correspondence or matters regarding the loan should be directed to NAC,
Rachavong contacted Mark Cleaton, NAC’s president, and Cleaton provided a loan payoff
amount, Cleaton also provided Rachavong with instructions on how to wire the loan payoff funds
to NAC’s account. The funds to pay off the Note were wired to NAC in April 2008 following the
closing of the sale of the Property to K&E. Lofton testified she was not alarmed when the settlement
statement for the closing indicated the funds would be sent to NAC, because it is customary for a
servicer to collect the proceeds from a sale and distribute them to the lender. In Rachavong’s
opinion, the wire transfer to NAC was consistent with the beneficiary information in the DOT.
William Jarvis, however, denied the Jarvises gave NAC the authority to accept payments from
borrowers or subsequent purchasers on their hehal t. ( leaton also denied NAC had authority to
accept payments as a payee under the Note.
NM’ did not disburse the loan payoff hinds to the Jarvises. Rather, NAC began sending
monthly checks written on its operating account to the Jarvises purporting to be payments on the
Note. The Jarvises deposited these checks and did not complain that the payments came from NAC.
rather than from Lofton, NAC stopped making the monthly payments in November 2008. In
November 2009, William Jarvis contacted Lofton and learned the Property had been sold and the
funds to pay oft the loan had been wired to NAC. On November 14. 2009, the Jarvises informed
Cleaton that NAC’ “was no longer authorized to act as a servicing agent on [their] behalf” On
January 11, 201 0, the Jarvises posted the Property lbr foreclosure.
Procedural Background
K&L filed this suit, seeking a declaration the Note had been paid and the DOT had been
discharged and no longer constitutes a valid and subsisting lien on the Property. K&E also requested
the Jarvises be peiinanently enjoined from attempting to foreclose on the Property, taking possession
and control ol the Property, or otherwise attempting to extinguish K&E’s interest in the Property.
The Jarvises filed a third-party petition against Stewart Title, CAS, One West Bank Group, LLC, and
Bayview The Jarvises asserted a negligence claim against CAS. They also alleged (1) Stewart
Title had been negligent by failing to pay the Jarvises the loan payoff fimds, and (2) they were third-
party beneficiaries of the escrow agreement relating to the sale contract between CAS and K&E and
Stewart Title breached the escrow agreement by ftuiling to properly account for and distribute the
funds from the transaction. The Jarvises also requested a declaratory judgment against Stewart Title
OneWest loaned the funds to K&E to purchase the Property and held a deed of trust on the Propey. Bayview was the servicing agent on
the loan to K&E.
that the Note and the 1)01 dictate payment was to be made to the Jarvises, Stewart Title was
obli!ated to pay the Jarvises, Stewart title lailed to pay the Jarvises. and the 1)01 had not been
discharged. Ihe Jarvises sought the equitable remedy ol quiet title against OneWest and l3ayview
and requested a declaratory judgment that the (Iced ot trust executed in favor of OneWcst and
Bayview was inlerior to the 1)01. The parties agreed to try K&E’s claims against the Jarvises lirst.
The Jarvises moved to exclude evidence of loans, other than the Lofton loan, that were
originated by NAC in which the Jarvises participated. The Jarvises argued the DOT, the Note, and
the UCC financing statement pertaining to the Lofton loan were unambiguous and governed the
parties’ relationship and, therefore, the parol evidence rule barred the admission of evidence of
NAC’s and the Jarvises’ conduct relating to other loans. K&E responded that evidence of the
Jarvises’ and NAC’s conduct on other loans was relevant to establishing the extent of NAC’s
authority to act on behalf of the Jarvises on the Note.
The trial court denied the Jarvises’ motion to exclude evidence. During trial, K&E offered
evidence that, of the ten loans the Jarvises participated in with NAC, three of the loans, including
the Lofton loan, were paid off The other two loans were paid off prior to the closing of the sale
between Lofton and K&E. On both occasions, the loan payoff funds were paid directly to NAC, and
NAC disbursed the funds to the Jarvises. The Jarvises accepted the payments directly from NAC
and did not assert on either occasion that NAC lacked authority to receive loan payoff funds on their
behalf.
Following a bench trial, the trial court entered judgment for K&E. The trial court declared
the Note had been fully paid and the DOT had been discharged and no longer constitutes a valid and
subsisting lien on the Property. It also enjoined the Jarvises from foreclosing, or attempting to
foreclose, on the DOT or from otherwise interfering, or attempting to interfere, with K&E’s
l)OSScSS ion and use ot the Property. Ihe trial COUI1 awarded K&lzS74.3445() for attorney s ICS in
the trial court and contingent attorney’s fees 11w an unsuccessful appeal by the Jarviscs.
In its hndmgs of fact and conclusions of law, the trial court found the Jarvises and NAC.
through their course ol conduct, established a usual, customary, and authorized procedure pursuant
to which NAC directly received the funds to pay off a loan and then disbursed those funds to the
Jarvises through a check drawn on NAC’s operating account. It found NAC had actual authority and
actual implied authority to accept and receive the loan payoff on the Note on behalf of the Jarvises.
In addition, it found the Jarvises. knowingly and by lack of ordinary care, permitted NAC to hold
itself out as having authority to receive the funds, clothed NAC with the indicia of authority to
receive the funds, and placed NAC in such a position as to lead Lolon to believe NAC had authority
to accept the funds. The trial court concluded that NAC had actual, implied, and apparent authority
to accept and receive the funds to pay oft the Note.
Bayview and K&E moved for summary judgment on the ground the trial court’s findings of
fact precluded the Jarvises from recovering on their third—party claims against Bayview. Stewart
Title also filed a motion for summary judgment and a supplemental motion for summary judgment
2
on the Jarvises’ (1) negligence claim on grounds it did not owe a duty to the Jarvises and, based on
the trial court’s findings NAC was the Jarvises’ agent with authority to receive the loan payoff funds,
it had not breached any duty to the Jarvises by delivering the funds to NAC; (2) breach of contract
claim on grounds the Jarvises were not third—party beneficiaries of the escrow agreement relating to
the sales contract between CAS and K&E and, based on the trial court’s findings that NAC had
authority to receive the loan payoff funds, Stewart Title did not breach the escrow agreement; and
Ihe Jarvises originally asserted a negligence claim and requested declaratory relief against Stewail Title, Alter Stewart Title filed Its motion
for summary judgment, the Jarvises filed an amended petttion asserting a claim for breach of contract, Stewart Title’s supplemental motion for
summary judgment addressed the breach of contract claim.
3 request br dcclarabor relict’ because Stewart Title was not a 11art’ to the DO I and did not have
a controversy with the Jarvises other than the non—viable negligence claim. The trial court granted
the motions for summary judgment and severed the Jarvises’ claims against CA S into a separate
cause of action. The Jarvises dismissed their claims against OneWest, causing the judgments in
favor of K&E, Stewart Title, and I3ayview to become final.
Motion to Exclude
in their Orst issue, the Jarvises contend the trial court erred by denying the motion to exclude
evidence. The Jarvises speci1cally assert the loan documents reviewed by Rachavong are
unambiguous and dictate the nature and extent of the relationship between the Jarvises and NAC
and, therefore, the parol evidence rule precludes the admission of evidence to vary the terms of those
documents,
The applicability of the parol evidence rule is a question of law that we review de novo.
Auththon Indem. (n. r’. Custom Site-Prep, inc., 358 S.W.3d 309, 316 (Tex. App.-- Houston [1st
Dist.] 2011, pet. denied). The parol evidence rule is not a rule of evidence, but a rule of substantive
contract law. Huhacek v. Ennis Stale Bank, 159 Tex. 166, 169, 317 S.W.2d 30, 31(1958); Edascio,
L.L.C’. v. NextiraUne L.L.G., 264 S.W.3d 786, 796 (Tex. App.—Houston [1st Dist.] 2008, pet.
denied). “An unambiguous contract will be enforced as written, and parol evidence will not be
received for the pullose of creating an ambiguity or to give the contract a meaning different from
that which its language imports.” Dai’idJ. Sacks, P. C. v. Haden, 266 S.W.3d 447, 450 (‘rex. 2008)
(per curiam). However. “parol evidence can be used to demonstrate a prior or contemporaneous
agreement that is both collateral to and consistent with a binding agreement, and that does not vary
or contradict the agreement’s express or implied terms or obligations.” Id. at 451 (citing Hubacek,
317 S.W.2d at 31); see also ERI Consulting Eng’rs, Inc. v. Swinnea, 318 S.W.3d 867, 875 (Tex.
() I O) fIutJi’!l, 26o SW3d at 45 I “A collateral aureeinent between parties concerning the
relationship ol several distinct obligations between them hills” within the collateral and consistent
exception to the parol evidence rule. Swinnea, 318 S.W.3d at 875.
The Jarvises argue the [)OT, the Assignment, and the UCC linancing statement reviewed by
Ravachong i(lentilaed the Jarvises as the beneficiaries, the lender, or the secured parties. (lid not
identify NAC as the “servicer,” and unambiguously required Ravachong to torward 1ayment to the
Jarvises in care of NAC. However, the documents reviewed by Ravachong stated all contact with
the Jarvises was to be “do” NAC. Further, other documents relating to the Lofton loan, although
not reviewed by Ravachong. refer to NAC as the “servicer” on the loan.
The loan documents clearly indicated NAC had authority to act on behalf of the Jarvises.
I lowever, although the loan documents established that NAC had authority to accept payments on
behalf of the Jarvises, the documents did not define the extent of NAC’s duties and authority under
the term “servicer” or in relation to the term “c/o.” Evidence of a collateral agreement between NAC
and the Jarvises regarding the scope of NAC’s authority under either of the undefined terms
“servicer” or “c/n” (lid not vary or contradict any of the express or implied terms or obligations set
out in the documents relating to the Lofton loan. Accordingly, the parol evidence rule did not bar
evidence of the Jarvises’ and NAC’s conduct on other loans, and the trial court did not err by
overruling the Jarvises’ motion to exclude evidence. We resolve the Jarvises’ first point of error
against them.
NAC’s Authority
In their second point of error, the Jarvises argue the trial court erred by granting the
permanent injunction because NAC did not have authority to act as agent for the Jarvises and, even
if NAC did have some authority to act for the Jarvises, it exceeded that authority when it accepted
the loan payoff funds. We construe this argument as a challenge to the sufficiency of the evidence
to support the trial court’s findings that NAC had authority to accept the loan payoff funds on behalf
of the Jarvises.
The question of agency is usually a fact issue. Park Cities Ltd. P ‘ship v. Transpo Funding
‘orp., 131 S.W.3d 654, 660 (Tex, App.—Dallas 2004, pet. denied). Because an agency relationship
cannot be presumed, the party who alleges agency has the burden of proving it, IRA Res., Inc. v.
Griego, 221 S.W.3d 592, 597 (Tex. 2007) (per curiam). K&E alleged NAC was the Jarvises’ agent
and, therefore, had the burden of proof on the issue.
In conducting a legal and factual sufficiency review of the evidence to support a trial court’s
findings of fact and conclusions of law, we apply the same standards used in reviewing the evidence
supporting a jury’s findings. &ztalina v Blasdel, 881 S.W.2d 295, 297 (Tex. 1994). An appellant
attacking the legal sufficiency of an adverse finding on an issue on which it did not have the burden
of proof must demonstrate there is no evidence to support the trial court’s adverse finding. Croucher
v. roucher, 660 S.W.2d 55,58 (Tex. l983);AjjardablePower, LP. v. Buckeye Ventures, Inc., 347
S.W.3d 825, 830 (Tex, App.Dallas 2011, no pet.). When examining a legal sufficiency challenge
to a finding of fact, we review the evidence in the light most favorable to the challenged finding and
indulge every reasonable inference that would support it. City ofKeller v. Wilson, 168 S,W.3d 802,
822 (Tex. 2005). Evidence is legally sufficient if it rises to a level that would enable a reasonable
and fair-minded fact finder to make the finding. Id. at 827. A legal sufficiency challenge fails if
there is more than a scintilla of evidence to support the finding. Kroger Tex. Ltd. P ‘ship v. Suberu,
216 S.W.3d 788, 793 (Tex. 2006); Affordable Power, L.P., 347 S.W.3d at 830. “Evidence does not
exceed a scintilla if it is so weak as to do no more than create a mere surmise or suspicion’ that the
fact exists.” Suberu, 216 S.W.3d at 793 (quoting Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 601
(Tex. 2004)); see al.co Sen’ corp. Int’l v. Guerra. 348 S.W.3d 221, 228 (Tex. 2011) (if evidence
does no more than give rise to mere surmise or suspicion, then it is no evidence).
In a factual sufficiency review ofa finding, we consider and weigh all the evidence, both in
support oland contrary to the challenged finding. Ortiz v. Jones, 917 S.W.2d 770,772 (Tex. 1996)
(per curiam). When a party challenges the factual sufficiency ofthe evidence supporting an adverse
finding on which it did not have the burden ofproof, we set aside the finding only ifit is so contrary
to the overwhelming weight of the evidence as to be clearly wrong and unjust. Cain v. BaIn, 709
S.W.2d 175, 176 (‘rex. 1986) (per curiam); Figueroa v. Davis, 318 S.W.3d 53, 59 (Tex.
App—Houston [1st Dist.] 2010, no pet.). We may not substitute our judgment for that of the trier
of fact or pass on the credibility of the witnesses. Mar. Overseas Corp. v. Ellis, 971 S.W.2d 402,
407 (Tex. 1998).
“An agent’s authority to act on behalfofa principal depends on some communication by the
principal either to the agent (actual or express authority) or to the third party (apparent or implied
authority).” Gaines v. Kelly, 235 S.W.3d 179, 182 (Tex. 2007). Absent actual or apparent authority,
anagentcannotbindaprincipal. CNOOCSe. Asia LtL v. PaladinRes. (SUNDA)LkL,222 S.W.3d
889,899 (rex. App.—Dallas 2007, pet. denied) (op. on reh’g).
Actual authority is authority a principal (1) intentionally confers upon on agent (2)
intentionally allows the agent to believe he possesses, or (3) by want ofdue care allows the agent to
believe he possesses. Affordable Power, 347 S.W.3d at 832; United Residential Properties. LP. v.
Theis, 378 S.W.3d 552, 564 (‘rex. App.—Houston [14th Dist.] 2012. no pet). Actual authority is
created through “written or spoken words or conduct ofthe principal communicated to the agent”
CNOOC Se. Asia Ltd., 222 S.W.3d 889 at 899; Theis. 378 S.W.3d at 564. The existence of an
agency relationship based on actual authority maybe implied from the conduct ofthe parties or from
-10-
the facts and circumstances surrounding the transaction in question, but cannot be based merely on
the words or deeds of the agent. CtVNUC Sc, Asia Ltd., 222 S.W.3d at 899.
Apparent authority is created by “written or spoken words or conduct by the principal to third
parties, not to the agent” i’d. Apparent authority is based on estoppel, arising “either from a
principal knowingly permitting an agent to hold [himselfj out as having authority or by a principal’s
actions which lack such ordinary care as to clothe an agent with the indicia of authority, thus leading
a reasonably prudent person to believe that the agent has the authority [he) purports to exercise.”
Gaines, 235 S,W.3d at 182 (quoting Baptist Mem ‘1 Hosp. Sys. v. Sampson, 969 S.W.2d 945, 948
(Tex. 1998)). Because apparent authority is based on estoppel, the principal’s conduct must be that
which would lead a reasonably prudent person to believe that authority exists. Id, at l8283. in
determining an agent’s apparent authority, a fact finder considers only the conduct by the principal
that would lead a third party to believe the agent had apparent authority and the reasonableness of
the third party’s assumptions about authority. Id. at 183.
Payment to an authorized agent of the obligee constitutes payment to the principal. C’ash v.
Lebowitz, 734 S.W.2d 396, 399 (Tex. App.—Dal1as 1987, writ ref’d n.r.c.). This is true even if the
agent appropriates the money to his own use. MacMichael LLC v. Packaging corp. ofAm., No, 05-
08-00561 -CV, 2009 WL 1959247, at *3 (Tex. App.—Dallas July 9, 2009, no pet.) (mem. op.); C’ash,
734 S.W.2d at 399 (any damage resulting from agent’s faithlessness and chicanery must be borne
by principal).
We turn first to whether there is sufficient evidence to support the trial court’s finding NAC
had actual authority to accept the loan payoff funds. Relying heavily on the testimony of William
Jarvis and Cleaton, the Jarvises assert that, after a loan closed, NAC was authorized to act only as
a contact point to forward loan payments and did not have authority to accept the payoff funds on
i I—
the Note br the larvises. I lowcver, it was undisputed that NAC had authority to perlbrm a number
ol lunctions 11w lenders, including the Jarvises, after a loan closed. Not only did NAC collect and
forward loan payments to lenders, it calculated when a late penalty was due and contacted the
borrower about the penalty. It held construction funds in escrow while the Property was being
rehabilitated. When necessary, it was involved in retaining, counsel to loreclose on a piece of
l)roperty or to represent the lender ifa borrower liled for bankruptcy. Further. aller discovering the
Property had been sold, the Jarvises terminated NAC’s authority to act on their behalf. The evidence
established that NAC had some actual authority to act for the Jarvises following the closing of the
Lolton loan. ihe issue is whether NAC ‘s authority included the ability to accept loan payoff funds
on behalf’ of the Jarvises.
An agency relationship may he implied from the conduct of the parties. CiVOOC Sc. Asia
Lid, 222 S W 3d at 899, Bu,nside An Conthtioning & Heating Inc i 7 5 Young C’orp 113
S.W.3d $89, $96 (Tex. App.—Dallas 2003, no pet.). Further, both the agency and the extent of the
agent’s authority may be proved by circumstantial evidence. Found. /?eserve Ins. Co. v. Wesson, 447
S.W.2d 436. 438 (Te. Civ. App.— -Dallas 1969, writ refd’); Iow’nsend v. Univ. Hosp.-Univ. of
Colorado, $3 S.W.3d 913, 921 (Tex. App.—Texarkana 2002, pet. denied). In this case, only three
loans in which the Jarvises participated with NAC, including the Lofton loan, were paid off. In the
two loans paid off prior to the Lofton loan, NAC provided a loan payoff amount to the closing.
company. The closing company forwarded payment to NAC, and NAC paid the Jarvises and other
lenders the proceeds by check written on NAC’s operating account. The Jarvises accepted these
payments without protesting that NAC was not authorized to receive loan payoffs on their behalf.
We conclude there is more than a scintilla of evidence that NAC had implied actual authority
to accept the loan payoff funds on behalf of the Jarvises. See Aquaduct LLC v. ivIcE/henie, 116
—12—
SW3d 438, 44243 ([cx. App—l4ouston I 14th DisL j 2003, no peL) (servicing agent on loan had
implied actual authority to collect full payment of outstanding balances on be[al tot lienholder). We
tiirther conclude the evidence supporting the trial court’s finding that NAC had implied actual
authorit to accept the loan payoff funds on behalf of the Jarvises was not so weak as to make the
finding clearly wrong and manifistly unjust. We, therefore, need not address whether the evidence
is suffIcient to support the trial court’s finding that NAC also had apparent authority to accept the
loan payoff funds on behalf of the Jarvises. Sec TEX. P. App. P.47,1. We resolve the Jarvises second
point of error against them.
Summary Judgment
In their third point of error, the Jarvises assert the trial court erred by granting summary
judgment foi 13 wvic’a and Stewart I itlc We ie’ ICVv thc gi mt of siimm u v judgment dc noo
Travelers ins. Co. c. Joachim. 315 S.W.3d $(0, $62 (Tex. 2010). A summary judgment under rule
of civil procedure I 66a(c) is properly granted when the movant establishes that there is no genuine
issue of material fact and it is entitled to judgment as a matter of law. TEx. R. Civ. P. I 66a(c); Nixon
v. Mr. Prop. Mgint. Co., 690 S.W.2d 546, 548 (Tex. 1985); Stone v. Mu/land Mult/arnz1y Equity
REIT, 334 S.W.3d 371, 373 (Tex. App.—Dallas 2011, no pet.). In reviewing a summary judgment,
we take as true all evidence favorable to the nonmovant, and we indulge every reasonable inference
and resolve any doubts in the nonmovant’s favor. 20801, Inc. v. Parker, 249 S.W.3d 392, 399 (Tex.
2008).
We turn first to the Jarvises’ contention the trial court erred by granting summary judgment
on the Jarvises’ negligence and breach of contract claims against Stewart Title. The Jarvises assert
the trial court erred by granting summary judgment on the negligence claim because Stewart Title,
as the escrow agent, had the duty to transfer the loan payoff funds to the Jarvises and breached that
13—
duty by failing to do so. The Jarvises also argue the trial court erred by granting summaryjudgment
on the breach of contract claim because they were the third-party beneficiaries of the escrow
agreement relating to the sales contract between CAS and K&E, and Stewart Tide breached the
escrow agreement by failing to deliver the proceeds as required by the agreement
We have concluded there is sufficient evidence to support the trial court’s determination
NAC had implied actual authority to accept loan payoff funds on behalf of the Jarvises. Stewart
Title transferred the finds to NAC, constituting payment to the Jarvises. See Cash, 734 S.W.2d at
399. Therefore, Stewart Title breached neither a common law duty to the Jarvises nor the escrow
agreement relating to the CAS and K&E sales agreement by failing to deliver the finds to the
Jarvises? We conclude the trial court did not err by granting Stewart Title summary judgment on
the Jarvises’ negligence and breach of contract claims.
The Jarvises also assert the trial court erred by granting summary judgment on the Jarvises’
claim against Bayview to quiet tide and against Bayview and Stewart Title for declaratory reliefthat
the DOT had not been discharged. The payment of a debt discharges the lien securing it without
any release from the lienholder. Perkins v. Sterne, 23 Tex. 561,563(1859); Green v. Am. Nat ‘lins.
Ca, 452 S.W.2d 1,4 (rex. Civ. App.—San Antonio 1970, no writ). When Stewart Tide forwarded
theloanpayoff funds toNAC, theJarvises’ agentwith authorityto acceptthe fluids, the lien on the
property was extinguished and the DOT was discharged. Accordingly, the trial court did not err by
granting summaryjudgment on the Jarvises’ claims against Bayview to quiet tide and for declaratory
relief against both Bayview and Stewart Tide. We resolve the Jarvises’ third issue against them.
Mcordingly. we need net decide whether an escrow agent own a duty ba non-pay to the underlying contract or whether the Invites were
third-pony beneficiaries of the escrow agreement See Tix. It. An. P.47.1.
-14-
Attonwv’s Fees
In their fOurth issue the Jarvises argue the trial court erred, by awarding K&E attorney’s fees
under the Uniform Declaratory Judgment Act (UDJA). We will not reverse the trial court’s decision
granting atLorneys ties in a declaratory iudgment action absent a clear showing of an abuse of
discretion, Max Duncan Farnili mi’s., Ltd. i’. iVFTNJnc., 267 S.W.3d 447, 454 (Tex. App.-Dallas
2008, pet. denied).
The Jarvises first contend the trial court’s award of attorneys fees to K&E was improper
and without tbundation because the “cause of action and relief sought by” K&E was in the nature
of a quiet title lawsuit, not a declaratory judgment action, and attorney’s fees are not available in an
action to quiet title. However, K&E initiated this action requesting injunctive relief’ to prevent
tbreclosure, declarations the Note had been fully paid and the 1)01’ had been discharged and no
longer constitutes and valid and subsisting lien on the Property. and costs and attorney’s fees. The
UDJA permits a party to bring a declaratory judgment action to invalidate a real estate note, as well
as any lien securing the note. Id. at 453: see aLso TEX. Civ. PRAC. & REM. CODE ANN. § 37.O()4(a)
(West 200$ 1-10 Colony, inc. ‘. Lee. No. 14-lO-01051-CV, 2012 WI. 4355534, at *4_5 (Tex.
App.—-Houston [14th 1)ist,] Sept. 25, 2012, no pet. h.). it also provides that, in any proceeding
under the UDJA, a trial court may award costs and reasonable attorney’s fees as are equitable and
just. Max Duncan Family mi’s., Ltd., 267 S.W.3d at 453; see a/so TEX. Civ. PRAC. & REM. CODE
ANN. § 37.009 (West 2008).
The action initiated by K&E involves more than title and possession of real property; the
action concerns the validity of a real estate note. Therefore, K&E could bring its claim under the
UDJA and could properly recover costs and attorney’s fees. See Mcix Duncan fr’amiii’ Inv.s’., Ltd., 267
S.W.3d at 454; Guniganti v. Kal’L’akuntla, 346 S.W.3d 242, 252—53 (Tex. App.—Houston [14th
—15—
DiaL] 2011, no pet). We cannot conclude the trial court abused its discretion by awarding K&E
attorney’s tees.
The Jarvises next complain that there was “a lack of proper evidentiary foundation” to
support the award of attorney’s fees for the time a legal assistant, Cheryl Moseley, worked on the
case. An award of attorney’s fees may include a legal assistant’s time to the extent the work
performed has traditionally been done by an attorney. Gill Sm’. Ass n v. int’l Supply Ca, Inc., 759
S.W.2d 697, 702 (Ta. App.—-Dallas 1988, writ denied). To recover fees for a legal assistant’s
work, the evidence must show the (1) legal assistant is qualified through education, trainin& or work
experience to perform substantive legal work; (2) substantive legal work was performed under the
direction and supervision ofan attorney; (3) nature ofthe legal work pcrtbnned; (4) hourly rate being
charged for the legal assistant; and(S) number ofhours expended by the legal assistant ii; see also
El Apple I. Ltd. v. Olivas, 370 S.W.3d 757, 763 (Ta. 2012). The Jarvises argue K&E iiled to
establish Moseley’s qualifications through their expert’s direct testimony, and the trial court erred
by allowing testimony about Moseley’s qualifications during redirect examination.
Arthur Selander, K&E’s attorney, testified as to K&E’s attorney’s fees. As relevant to this
appeal, Selander testified in his direct examination about the work his law finn had performed on
the case and that Moseley had worked on the case “throughout all the matters” described by
Selander. The Jarvises’ attorney cross-examined Selander about his billing statements and whether
Stewart Title was paying K&E’s attorney’s fees. Selander also testified about whether fees relating
to certain activities and to the third-party claims had been segregated.
On redirect examination, Selander testified about the additional time he and Moseley had
expended following the first two days oftrial. He then testified that Moseley had twenty-six years’
experience in the legal field as a legal secretary and a legal assistant. She was certified as a
-16-
professional legal secretary in I 091 and as a legal assistant in 2003. As Selander began testifying
that the services N4oselev had perFormed on the ease related to substantive legal work, the Jarvises
objected that any testimony relating to Moseley was outside the scope ot the cross—examination. The
trial court overruled the objection, and Selander testified Moseley s work related to substantive legal
matters. The trial court’s award of attorney’s fees included fees for Moseley’s time.
The Jarvises do not assert that Selander’s testimony during redirect was insutlicient to
establish Moseley’s qualifications. Rather, they contend the trial court erred by allowing Selander
to testify about rvloseley’s qualifications on redirect when that subject had not been addressed in
Selander’s direct testimony or on cross—examination. We review a trial court’s decision to admit or
exclude evidence for an abuse of discretion. Bay Area ilealthcare Grp,, Ltd. v. MeShane, 239
SW .3 d 231 ,234 (Tex. 2007 (per curiani). A trial court abuses its discretion ifit acts without regard
to guiding rules or principles. (Jiiens—Corning fr’therglas Corp. v. Malone, 972 S.W.2d 35,43 (Tex.
1998). We must affirm the trial court’s ruling if the record shows any legitimate basis supporting
the ruling. id.
The trial court is required to exercise reasonable control of the mode and order of testimony
during a trial. TEx. R. EviD. 611(a). In doing so, the trial court may allow nearly complete freedom
to examining counsel to bring out new matters on redirect examination, subject to recross
examination. Tricon Tool & Supply, Inc. v. Thuniann, 226 S.W.3d 494, 508 (Tex. App.—Houston
[1st Dist.] 2006, pet. denied); see also Crum & Forster, Inc. v. Monsanto Co., 887 S.W.2d 103, 141
(Tex. App.—Texarkana 1994, no writ). Selander’s testimony during his redirect examination about
Moseley’s qualifications was not wholly unrelated to the matters testified about during direct and
cross-examination. Further, the Jarvises had the opportunity to cross-examine Selander on
Moseley’s qualifications, but declined to do so. Accordingly, we cannot say the trial court abused
—17—
its discretion by allowing Selander to testify during his redirect testimony about Moseleys
qualifications. See Thuinann, 226 S.W.3d at 5O7—O8 (trial Court did not abuse its discretion by
allowinu counsel to reopen the evidence in order to testi iv about Counsels quali hcations. trial.
appellate experience, and appellate attorney’s fees). We resolve the Jarvises’ fourth point of error
against them.
We affirm the trial court’s judgment.
ROBERT rvl. FILLMORE
JUSTICE
1 1034 lFP05
—is—
Qtnurt uf pprzI15
FiftIi JiIrir1 uf xa at Da11ai
JUDGMENT
WILLiAM C. JAR VIS ANI) C1N i)Y Appeal from the 162nd Judicial District
JARVIS, Appellants Court of Dallas County, Texas. (TrCLNo.
I 0—00947—I).
No. 05—11 —00341 ( A’ V Opinion delivered by Justice Fillmore,
Justices Moseley and Myers participating.
K&E RE ONE, LLC, STEWART TITLE
COMPANY, AND I3AVVIEW LOAN
SERViCING, Appellees
In accordance with this Courts opinion of this date, the judgment ot the trial court is
A1’FIRi1E1). It is ORL)EREI) that appellees K&E Re One, LLC, Stewart Title Company, and
Bayview Loan Servicing recover their costs of this appeal from appellants William C. Jarvis and
Cindy Jarvis.
Judgment entered November 30, 2012.
ROBERT M. FILLMORE
JUSTICE